Five new airlines to compete over Pakistan’s skies in 2018
Five new private airlines are expected to enter Pakistan’s aviation industry as competition within the Open skies intensifies. The new ventures may bring down passenger fares, but pose new challenges for the already struggling domestic airlines and the national flag carrier, Pakistan International Airlines (PIA).
At least five new airlines – Askari Air, Air Siyal, Go Green Airways, Liberty Air and Afeef Zara Airways – have applied for regular public transport (RPT) license to Pakistan’s Civil Aviation Authority (CAA) and will likely start flight operations in 2018, The Nation writes.
Most of the upcoming carriers will target remote destinations, to which the new carriers will bring airplanes suitable for small airports. Thus far, it was the national flag carrier PIA that has catered to these routes as the only player in air travel for these areas.
With the population of around 210 million, Pakistan’s air travel market continues to grow. “Air traffic of the country has swelled 40% over the past five years to 20 million passengers,” said Standard Chartered Pakistan CEO Shahzad Dada, The Express Tribune reports.
The current annual growth rate of Pakistan’s aviation industry is considered to be at around 9% and could continue till 2020, according to a forecast by the International Air Transport Association (IATA).
“These numbers tell us the Open skies policy has proved favorable for the country and its people,” said former additional director of the Pakistani CAA Muhammad Afsar Malik. He is regarded to have played a key role in framing Pakistan’s National Aviation Policy in 2015.
According to Malik, Pakistan’s domestic air traffic has grown 10%, which is six percentage points higher than the 4% expansion in international air traffic, The Express Tribune reports.
Although the country’s market size is generally increasing, the share of domestic airlines is contracting. For instance, in fiscal year 2016-2017 domestic airlines carried 42% of all passengers in comparison to the 58% flown by international airlines.
Malik also points out that airlines seek to attract customers through fare reductions. “Private airlines, especially foreign carriers, have mainly resorted to price cuts, instead of going more towards customer satisfaction in terms of comfort and improved services,” a PIA spokesperson commented in an e-mail for The Express Tribune.
A private Pakistani airline’s, Shaheen Air, spokesman suggested that the government should revisit its Open skies policy as foreign carriers could enter the country’s market without restrictions. According to him, authorities should introduce a new policy whereby both local and foreign carriers have a fair share in the market.
Market liberalization should be designed in such a way that industry players would be able to turn in healthy profits. For now, they are operating at a low profit margin of less than 3%, the spokesman said, adding that “The industry, including PIA, is producing a combined net loss annually.”
Earlier, RFE/RL reported that Pakistan will attempt to privatize its loss-making national airline before parliamentary elections are held later this year. PIA has been losing money in the face of well-capitalized regional Gulf rivals such as UAE’s Emirates and Etihad Airways as well as Qatar Airways. It is hard for Pakistan’s domestic airlines to compete with these foreign carriers since they are state-funded or operated.
An ex-chairman of the Travel Agents Association of Pakistan Yahya Polani believes there will be big challenges ahead as foreign airlines enter the market, but says intense competition is “customer-friendly, which is the goal,” The Express Tribune writes.
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